SpareBank 1 Sørøst-Norge

M&A Activity • Nov 10, 2021

Merger of SpareBank 1 Sørøst-Norge and SpareBank 1 Modum approved by the banks' boards

Merger of SpareBank 1 Sørøst-Norge and SpareBank 1 Modum approved by the banks' boards

Reference is made to the stock exchange notice published on 15 September 2021 concerning the letter of intent for the merger of SpareBank 1 Sørøst-Norge and SpareBank 1 Modum.

The boards of banks have today approved a plan for merging the banks (merger plan). SpareBank 1 Sørøst-Norge will be the legal and accounting acquiring bank, and thus acquire all of SpareBank 1 Modum's assets, rights and obligations at the completion of the merger. The merged bank will continue under the name SpareBank 1 Sørøst-Norge.

The objective is to create a strong regional savings bank in the banks' market areas. Based on figures from the account as of 30 September 2021, SpareBank 1 Sørøst-Norge will have:

• Total assets (including transfers to mortgage credit institutions) of NOK 116 billion

• Equity (excluding hybrid capital) of approx. NOK 11.2 billion

• CET1 capital of 18.2 per cent (pro forma)

As regards background and objectives, financial objectives, composition of the merged bank's bodies and management, reference is made to the Stock Exchange notice published on 15 September 2021.

Further on the exchange ratio

The exchange ratio and merger consideration are set after negotiations between the banks and are based on a process that includes financial and legal due diligence, review of the banks' balance sheets as of 30 June 2021, with assessment of surplus and deficit values of assets and liabilities, as well as an updated review as of 30 September 2021, and emphasis on book and value adjusted equity and normalized result. Based on this, banks agree on an 85.2 per cent exchange ratio to SpareBank 1 Sørøst-Norge and 14.8 per cent to SpareBank 1 Modum.

The consideration for the acquisition of operations in SpareBank 1 Modum will be provided in the form of equity certificates in the merged bank, which are issued to existing equity certificate holders in SpareBank 1 Modum, Varig Forsikring Midt-Buskerud and Sparebankstiftelsen SpareBank 1 Modum.

In connection with the merger, half of the primary capital in SpareBank 1 Modum as of 30 September 2021, NOK 624 million, will be converted into equity certificate capital. The equity certificates are issued by SpareBank 1 Sørøst-Norge to Sparebankstiftelsen SpareBank 1 Modum. The merged bank will then have equity capital certificate ratio of about 60 per cent at the time of the completion of the merger.

Equity certificates in SpareBank 1 Sørøst-Norge issued as consideration to existing equity certificate holders in SpareBank 1 Modum and to Sparebankstiftelsen SpareBank 1 Modum at the conversion of ownerless capital is issued at a rate of NOK 53.54 per equity certificate. This corresponds to the three-month volume-weighted rate as of 4 November 2021.

12 887 149 new equity certificates will be issued to Sparebankstiftelsen SpareBank 1 Modum as a result of the conversion and 8 521 495 equity certificates will be issued to existing equity certificate holders in SpareBank 1 Modum, Sparebankstiftelsen SpareBank 1 Modum and Varig Forsikring Midt-Buskerud. This means that one equity certificate in SpareBank 1 Modum is exchanged for 2.223 equity certificates in the merged bank. This gives the following allocation of the equity certificate capital in the merged bank:

Allocation of ownership # EC Ownership

SpareBank 1 Stiftelsen BV 24 141 356 17,2 %

Sparebankstiftelsen Telemark-Grenland 18 910 174 13,5 %

Sparebankstiftelsen Nøtterøy-Tønsberg 10 925 503 7,8 %

Sparebankstiftelsen Telemark - Holla og Lunde 10 273 723 7,3 %

Other owners SB1 Sørøst-Norge 54 439 161 38,9 %

Sparebankstiftelsen SpareBank 1 Modum 18 444 646 13,2 %

Varig Forsikring Midt-Buskerud 2 963 998 2,1 %

Total 140 098 561 100,0 %

Timetable and prerequisites for implementation

The boards of the two banks will now present the proposed merger to the supervisory board and the general meeting of the banks respectively. The completion of the merger is, among other things, conditional on the supervisory board/general meeting making the necessary resolutions at meetings on 16 December 2021, that the Financial Supervisory Authority of Norway grants the necessary permission for completion and that the Norwegian Competition Authority does not impose conditions that significantly change the assumptions that the banks have assumed for the agreement.

The aim is to complete the merger in early April 2022.

The banks have retained SpareBank 1 Markets AS as common financial adviser in connection with the merger, while Advokatfirmaet Selmer AS has been retained as a common legal adviser.

Contact persons:

SpareBank 1 Sørøst-Norge

Finn Haugan, Chair, tel. + 47 900 41 002

Per Halvorsen, Group CEO, tel. + 47 934 07 441

SpareBank 1 Modum

Trond Gewelt, Chair, tel. + 47 970 44 880

Egil Meland, CEO, tel. + 47 481 05 221

This information is disclosed pursuant to the requirements of the Securities Trading Act § 5-12.

This information constitutes inside information and is subject to the disclosure requirements in accordance with the Market Abuse Regulation (MAR). The notification will be published on behalf of SpareBank 1 Sørøst-Norge by Per Grøtterød, Head of Treasury, at 08:15, 10 November 2021.